North East families face eye-watering mortgage hikes as a result of the Tories’ crashing the economy, warns Easington MP Grahame Morris.

Bank of England data shows that homeowners coming off two-year fixed terms are set to be clobbered due to the Tories’ attempts to hand unfunded tax cuts to the wealthiest. Labour leader Keir Starmer called it a “crisis made in Downing Street but paid for by working people” as he renewed his calls for Liz Truss to reverse the “kamikaze budget” that has “crashed the economy” and seen interest rates and borrowing costs skyrocket.

Despite the government’s humiliating 45p climbdown, mortgage rates are still likely to top five or even six per cent. This would leave homeowners in the North East of England facing average rises up to £320 a month. The increases are likely to prove unaffordable for many.

An average buyer taking out a two-year fixed mortgage in the third quarter of 2020 faced an interest rate of about 1.6 per cent and monthly repayments of £697. Should interest rates reach five per cent, those repayments would increase to £944, and at six per cent repayments would be £1024 a month. The average increase across the United Kingdom is almost £400 a month.  This is a conservative estimate: immediately after the government’s humiliating 45p climbdown, rates were anticipated to reach 5.5 per cent.

The increase in repayments will offset action on energy bills for many households. The government’s refusal to back Labour’s plans for a windfall tax on oil and gas providers meant that taxpayers were already on the hook for higher additional borrowing than they would have been under a Labour government. But Truss’ kamikaze budget has added to the region’s cost of living pain.

Keir Starmer MP, leader of the Labour Party said:

“These eye-watering mortgage increases will cause homeowners across the North East sleepless nights – and the Tory Government is entirely to blame.

“Liz Truss and Kwasi Kwarteng crashed the economy with their attempts to hand enormous, unfunded tax cuts to those who least need it. The humiliating U-turn they were forced into came too late – the damage had been done. Now people in the North East are suffering the consequences.  This was a crisis made in Downing Street but paid for by working people.

“The Prime Minister must reverse her kamikaze budget, including her totally unfunded £17 billion corporation tax giveaway to the biggest companies. The burden of the Tories’ fantasy economics should not fall on working people.”

Easington MP Grahame Morris said:

“Families deserve so much better than this Tory-made crisis.

“There is an alternative. Last week Labour announced a comprehensive plan to target a homeownership rate of 70% with 1.5 million new homeowners.

“We set out proposals to build more houses, raise stamp duty on foreign buyers to stop them buying whole developments off-plan, and give first-time buyers first choice on newly built homes.

“Our message is unequivocal: Labour is the party of home ownership.”